You can’t manage what you don’t measure.

Posted by: Chris Boebel
Date: November 5, 2013

I would be interested in hearing how your approach to measurement has changed over the years.  Do you think it’s gotten more sophisticated, as new tools come along that might assist with analysis, or have you cut it down to the essentials?

Transforming a bunch of data into useful, actionable information is near and dear to my heart.  It’s something I spend a lot of time thinking about, both in terms of personal investigation and as it applies to our retail operations here at Delta Sonic.

In an unrelated matter, I was thinking the other day about how we used to ask people for the last four digits of their phone number.  Long before loyalty occupied the coveted center square on the buzzword bingo board, we were doing it.  Neat!

_________________________________________________

Posted by: Tony
Date: November 8, 2013

You can’t manage what you don’t measure.

I still use the GAP [Gross Profit After Payroll] Report as my main source of information for productivity review.  Every week I skip to the bottom right hand corner to see if we are up or down for the week [as compared to last year], as well as taking a quick glance at our overall YTD number.  Then I start parsing out the departments.

For all the old-timers out there who are still rooting for the Stereo Advantage, the electronics division of the Advantage Co [now named 9Volt for easier reference] is having the biggest increase in GAP ever in the history of the company.  And the best part of it is that they have fully transitioned from Stereo Advantage Retail to Lifetime Service, Advantage Technology Integrators, and iFul Wholesale.

At its peak in 1992, Stereo Advantage Retail did $22M, while this year it will come home with a mere shred of that number.  Back in 1992, we had 240k transactions between Stereo Advantage [140k] and Sneaker Advantage [100k].  5195 Main Street was rocking back then.  LTS, ATI, and iFul, however, are the new engines of the Stereo Advantage these days.  All three are having record breaking years.  It took knocking down the Stereo Advantage building to convince everyone that the good old days were never coming back.  We weren’t going back to the old store, VCR‘s, and the Gusto.  They have found their success at 1955 Wehrle [and at our LTS facility on the West Coast].  It is nothing short of remarkable.

If you review our GAP Reports from the past 25 years, it would give you pretty insightful look at the maturation, success, or demise of just about every undertaking at the Advantage.

Next up in Measurement Time at the Advantage is our Cash Flow Report.  This is, essentially, a weekly Balance Sheet, and it gives us a good look at how we have done over the past 12 months.  It details how our assets and liabilities have grown, been depleted, or been shifted.  It is basically a statement of use and change.  Butch has personally been doing this one since he became CEO in 1997.  It’s his favorite perspective of the company.

Now we are starting our new Merchant Harvest Report which will compliment our GAP Report.  It will detail the progress of our programs and services on a weekly basis.  One of the most crucial Merchant Harvest activities we want to measure is customer referral.

The coin of the realm at the Advantage has always been word of mouth advertising.  As a retailer in the 21st century, we recognize that we must provide our customers with an incredible experience, and that experience must generate revenue.  The currency of that revenue is our customer’s advocacy.  Basically, our customers pay for goods and services with money, but they reward us for an outstanding experience with their referrals.  The sale is not complete until the customer enthusiastically refers us.  Our success depends on it.  I’m sure you remember that one.  It’s something I try to never forget.

The one weak link in our measurement chain is still our inventory analysis.  No matter how much we invest in data, we invariably end up buying by feel.  I don’t know if we will ever change, but, if we don’t, we will never benefit from the amazing analytic resources available today.

As for the onslaught of Big Data, it’s hard not to recognize the value in just about any information on your business activity, but it can be counter-productive if you become a slave to its collection, preparation, delivery, and analysis.  Along with social media, we are learning as we go.

Al in all, I think I personally did a better job of the analysis of our business activity before I used a computer.  Nothing beats that tactile connection to your inventory and customer.  It’s why I still love being a merchant.

Screen Shot 2013-11-05 at 12.52.36 PM

One thought on “You can’t manage what you don’t measure.

  1. Thank you for the unexpectedly detailed reply. Some of that I remember from the old days. Do you think that GAP gives you a clear enough picture of how your front-line customer-facing people are doing? On a related note, do you do any targeted marketing based on customer purchase history?

    Regarding big data, there’s the apocryphal story of Target identifying a woman as pregnant before she told her family, but there also has been a lot of good to come out of it, particularly in retail. Perhaps your market segments aren’t broad enough, but I have often wondered if previous purchases could form reliable indicators for what might be purchased next.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s